banking finance

Economists forecast at least 25 bps cut in BSP rates

August 12, 2019

ECONOMISTS are expecting at least a 25 basis point cut in the Bangko Sentral ng Pilipinas’ (BSP) key rates on Thursday on the back of slower inflation in July 2019.      The Philippine Statistics Authority (PSA) on Tuesday reported that rate of price increases decelerated anew to 2.4 percent, reminiscent of the July 2017 figure, from last June’s 2.7 percent, thanks to the lower annual rate registered by the heavily-weighted food index.      Average inflation to date is 3.3 percent while inflation rate in July 2018 is higher at 5.7 percent.      Also, core inflation, which excludes volatiles food and oil items registered slower rate of 3.2 percent from month-ago’s 3.3 percent, resulting to an average of 3.6 percent to date.      Standard Chartered Bank Asia economist Chidu Narayanan, in a report, said the slowdown of domestic inflation rate provides the BSP’s policy-making Monetary Board (MB) a leeway to slash the central bank’s key policy rates when it meets on Thursday, August 8.      “Today’s lower inflation, combined with a likely lower Q2 GDP growth of 5.9 percent, may cause BSP to deliver a 25bps rate cut when it meets on Thursday. We expect another 50bps from BSP this year, following the likely 25bps cut later this week,” he said.       The Philippine Statistics Authority (PSA) is scheduled to report the domestic economy’s second quarter performance, as measured by gross domestic product (GPD), on Thursday.      In the first three months this year, the domestic economy posted a slowdown to 5.6 percent from quarter-ago’s 6.3 percent, which economic managers pointed to the impact of the delay in the approval of this year’s national budget.      Authorities said the government was not able to spend as programmed because spending was hampered by the limitations under the re-enacted budget.      Economic managers, however, assured the public that a spending catch-up plan has been put in place to lift government spending and, in turn, help boost domestic growth.      With regards to the inflation rate, Narayanan forecasts this to fall below two percent in August to September and this, he said, is seen to bring average inflation this year to about 2.7 percent.      “A combination of lower food prices, lower oil prices, and a high base effect will help contain inflation,” he said.      The slowdown in inflation rate, which peaked at 6.7 percent in September and October last year, was the driving force behind the 25 basis points reduction the BSP rates last May.      The MB also boosted domestic liquidity through the total of 200 basis points slash in major banks’ reserve requirement ratio (RRR) from May to July this year. Authorities said a 100 basis points cut in RRR releases about P90 billion into the system.      Despite these cuts, Narayanan said “monetary conditions in the Philippines continue to remain tight.”      He said the bank’s Monetary Conditions Index (MCI) for the Philippines “indicates conditions are still at their tightest in three years on a stronger REER (real effective exchange rate), higher real interest rates and softer credit growth.”      “The likely further drop in inflation below 2 percent is likely to cause conditions to tighten much further,” he added.      Relatively, ING Bank Manila senior economist Nicholas Mapa, in a report, said deceleration of inflation last July increased expectations for a rate cut on Thursday, especially following the cut in the Federal Reserve’s key rates last week.      He cited Philippine monetary officials’ statement that they remain data-dependent vis-à-vis their policy decisions but also noted that BSP Governor Benjamin Diokno has hinted of additional 50 basis rate cut for the remaining months of the year after last May’s reduction.      “We believe we will see at least a 25 bps rate cut (with door open for 50 bps) all the more given that 2Q GDP is likely to settle below the six percent handle,” he added.      ANZ Research, in its report, said effects of elevated inflation rate last year along with weaker demand pressures may result in the decline of inflation below two percent in the next few months.      “Today’s data support the view that inflation remains on a clear downtrend and so we expect the Bangko Sentral ng Pilipinas (BSP) to cut its policy rate by 25bps at its meeting this Thursday,” it added.      Also, UnionBank chief economist Ruben Carlo O. Asuncion, in his report, said the inflation outturn last July is a big factor in the possible cut in the BSP’s key rates this week. “This, however, will also depend on Q2 output results,” he said, projecting second quarter GDP to be around 5.9 percent. (PNA)

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Landbank eyes 15% annual growth for agricultural loans

August 12, 2019

OFFICIALS of state-owned Land Bank of the Philippines (Landbank) are targeting to grow agriculture-focused loans by 15 percent annually to help about three million farmers by the end of the Duterte administration in 2022.      Landbank President and CEO Cecilia Borromeo said they target agriculture loans to reach P265 billion by 2020, up from the P231.25 billion target this year, wherein they target to help one million farmers.      “It’s a consistent growth so by 2022, the portfolio of the bank to the agriculture sector will reached P350 billion and we should be able to assist at least three million farmers by then,” she said.      This, as President Rodrigo Duterte directed Landbank officials to extend more aid to farmers since this is among the bank’s mandate.      Borromeo said they currently have 44 lending centers around the country and they aim to increase this to 50 centers by 2020.      She explained that the bank’s Board of Directors has approved the opening of new lending centers in Lanao del Norte, Quirino Province and in Antique.      She stressed that the bank is very compliant with the Agri-Agra law, with 27 percent of the total loans amounting to P222 billion currently allocated to the agriculture sector.      “We will, at the very least, maintain that share in the agriculture sector. It can be more depending on the economy,” she said.      Under Agri-Agra law, banks are required to allocate 10 percent of their funds for agrarian reform credit (Agra) and 15 percent for other agricultural credit (Agri).      The Landbank chief added that “if there will be a slowdown in other sectors, then the share of the agriculture sectors will increase.”      In the first half of the year, the bank extended P744.5 billion worth of loans to the priority sector, about 93.1 percent of total loans.      Loans extended to small farmers amounted to 42.31 billion, while P14 billion was extended to small fishers and their associations.      Loans extended for the support of the agriculture and fisheries sector totaled to P177.32 billion while loans that support the national government’s priority programs, including infrastructure projects, reached P524.86 billion. (PNA)

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Economists forecast at least 25 bps cut in BSP rates

August 9, 2019

ECONOMISTS are expecting at least a 25 basis point cut in the Bangko Sentral ng Pilipinas’ (BSP) key rates on Thursday on the back of slower inflation in July 2019.      The Philippine Statistics Authority (PSA) on Tuesday reported that rate of price increases decelerated anew to 2.4 percent, reminiscent of the July 2017 figure, from last June’s 2.7 percent, thanks to the lower annual rate registered by the heavily-weighted food index.      Average inflation to date is 3.3 percent while inflation rate in July 2018 is higher at 5.7 percent.      Also, core inflation, which excludes volatiles food and oil items registered slower rate of 3.2 percent from month-ago’s 3.3 percent, resulting to an average of 3.6 percent to date.      Standard Chartered Bank Asia economist Chidu Narayanan, in a report, said the slowdown of domestic inflation rate provides the BSP’s policy-making Monetary Board (MB) a leeway to slash the central bank’s key policy rates when it meets on Thursday, August 8.      “Today’s lower inflation, combined with a likely lower Q2 GDP growth of 5.9 percent, may cause BSP to deliver a 25bps rate cut when it meets on Thursday. We expect another 50bps from BSP this year, following the likely 25bps cut later this week,” he said.       The Philippine Statistics Authority (PSA) is scheduled to report the domestic economy’s second quarter performance, as measured by gross domestic product (GPD), on Thursday.      In the first three months this year, the domestic economy posted a slowdown to 5.6 percent from quarter-ago’s 6.3 percent, which economic managers pointed to the impact of the delay in the approval of this year’s national budget.      Authorities said the government was not able to spend as programmed because spending was hampered by the limitations under the re-enacted budget.      Economic managers, however, assured the public that a spending catch-up plan has been put in place to lift government spending and, in turn, help boost domestic growth.      With regards to the inflation rate, Narayanan forecasts this to fall below two percent in August to September and this, he said, is seen to bring average inflation this year to about 2.7 percent.      “A combination of lower food prices, lower oil prices, and a high base effect will help contain inflation,” he said.      The slowdown in inflation rate, which peaked at 6.7 percent in September and October last year, was the driving force behind the 25 basis points reduction the BSP rates last May.      The MB also boosted domestic liquidity through the total of 200 basis points slash in major banks’ reserve requirement ratio (RRR) from May to July this year.      Authorities said a 100 basis points cut in RRR releases about PHP90 billion into the system.      Despite these cuts, Narayanan said “monetary conditions in the Philippines continue to remain tight.”      He said the bank’s Monetary Conditions Index (MCI) for the Philippines “indicates conditions are still at their tightest in three years on a stronger REER (real effective exchange rate), higher real interest rates and softer credit growth.”      “The likely further drop in inflation below 2 percent is likely to cause conditions to tighten much further,” he added.      Relatively, ING Bank Manila senior economist Nicholas Mapa, in a report, said deceleration of inflation last July increased expectations for a rate cut on Thursday, especially following the cut in the Federal Reserve’s key rates last week.      He cited Philippine monetary officials’ statement that they remain data-dependent vis-à-vis their policy decisions but also noted that BSP Governor Benjamin Diokno has hinted of additional 50 basis rate cut for the remaining months of the year after last May’s reduction.      “We believe we will see at least a 25 bps rate cut (with door open for 50 bps) all the more given that 2Q GDP is likely to settle below the six percent handle,” he added.      ANZ Research, in its report, said effects of elevated inflation rate last year along with weaker demand pressures may result in the decline of inflation below two percent in the next few months.      “Today’s data support the view that inflation remains on a clear downtrend and so we expect the Bangko Sentral ng Pilipinas (BSP) to cut its policy rate by 25bps at its meeting this Thursday,” it added.      Also, UnionBank chief economist Ruben Carlo O. Asuncion, in his report, said the inflation outturn last July is a big factor in the possible cut in the BSP’s key rates this week.      “This, however, will also depend on Q2 output results,” he said, projecting second quarter GDP to be around 5.9 percent. (PNA)

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SSS sickness benefits climb

August 9, 2019

THE SOCIAL Security System’s (SSS) disbursements of sickness benefits reached P984.42 million in the first four months, higher than the P875.42 million released in the same period in 2018.      In a statement on Sunday, the state pension fund said it saw a P109-million year-on-year climb in sickness benefit disbursements in the January-April period.      Meanwhile, the number of beneficiaries of sickness benefit in the four months ended April climbed to 155,856 members from the 145,370 beneficiaries recorded in the same period in 2018.      SSS released P913.88 million in sickness benefits under the social security program between January and April, up 9.5% from P834.22 million disbursed in the same period in 2018.      Some P70.54 million was also paid out for sickness benefits for work-related sickness and injuries under the Employee’s Compensation Program, 71.3% higher than P41.19 million released year-on-year.      “A qualified member under the sickness benefit program receives a daily cash allowance for the number of days he is unable to work due to sickness or injury,” SSS said.      To qualify for sickness benefit, a member must have been unable to work due to an illness for at least four days, whether confined at home or in a hospital. The member must have at least three monthly contributions within the 12-month period before the semester of illness.      A member can receive a maximum of 120 days in sickness benefit in one calendar year. If the member is still not capable of working after this period, the worker must report to the SSS to determine qualification for disability benefit.      “SSS aims to provide meaningful social protection to its members through the benefits that we provide and the programs that we continuously develop,” SSS President and Chief Executive Officer Aurora C. Ignacio said in the statement.      “We hope that our members view the contribution rate increase as bigger savings for their future, especially in times of need,” she added.

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LANDBANK to boost lending to agriculture

August 2, 2019

LAND BANK of the Philippines (LANDBANK) said Mindanao will receive the biggest chunk of the bank’s loans, with the region having the biggest agricultural area in the country.      “Since Mindanao is the biggest agricultural area, then of course Mindanao will continue to get a very large of our loans to agri,” LANDBANK President and CEO Cecilia C. Borromeo told reporters at the sidelines of a central bank event on Friday.      Ms. Borromeo said the bank is looking to increase its loan to the agriculture sector by 20% by 2020 through “intensified efforts.”      “Historically, our agri loan portfolio has been growing by more than 15% year-on-year. Probably with the intensified efforts we might reach 20% growth. Not this year (but) probably in 2020,” she added.      In his State of the Nation Address last month, President Rodrigo R. Duterte threatened to abolish the LANDBANK for supposedly neglecting its mandate to finance agricultural projects and endeavors, criticizing the bank for being “mired with so many commercial transactions.”      However, the bank earlier said it is the only bank compliant with the Agri-Agra Law. Republic Act 10000 or the Agri-Agra Reform Credit Act mandates banks to allot at least 10% of their total loanable funds to agrarian reform beneficiaries and 15% for farmers and fisherfolk.      Data provided to reporters showed LANDBANK’s exposure to the agriculture and fisheries sectors amounted to P177.32 billion as of end-June, 22.17% of the lender’s total loan portfolio of P799.64 billion — 16.8% higher than P151.78 billion recorded as of June 2018.      This is on top of the P42.31 billion lent to the “mandated” sector, which includes small farmers including agrarian reform beneficiaries and their associations (P42.17 billion) as well as small fishers and their associations (P140 million).      Meanwhile, Ms. Borromeo said the bank is encouraging small farmers to join cooperatives and associations as it looks to “intensify” its lending to the agricultural sector.      “We are the biggest lender to the agriculture [sector] already. So we just need to reach out to more small farmers and their cooperatives, which is what we’ve been trying to do year after year. We just need to intensify it some more,” she added.

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SSS digitizing processes, services

July 31, 2019

STATE-RUN Social Security System (SSS) said it is in the process of digitizing its processes to improve transactions after President Rodrigo R. Duterte in his State of the Nation Address included the pension fund in agencies that need improvement.      In a press release on Thursday, SSS President and Chief Executive Officer Aurora C. Ignacio said the pension fund has started acquiring new digital infrastructure “to fast track the full transition of SSS core and business processes to digitalization.”      “As mandated by our Social Security Commission ex-officio Chairperson Carlos G. Dominguez in his first order of business when he took office last March, he instructed to speed up the transition to the digitalization process. This is one of his priority policies under the new charter of the pension fund,” Ms. Ignacio said.      Mr. Duterte, in his SONA last Monday, said the SSS and the Land Transportation Office (LTO), Bureau of Internal Revenue (BIR), Land Registration Authority (LRA) and the Home Development Mutual Fund or Pag-IBIG need to improve their services.      Finance Secretary Carlos G. Dominguez said in a briefing on Tuesday that the slow service of SSS is “costing the public money” and ordered the agency to develop a system using technology instead.      “I told them (SSS), you know the way you’re doing your business, our estimate is it cost you seven pesos to deliver P100. Now, that is too expensive. Other countries…if I remember right…Japan, 50 centavos to deliver a hundred pesos worth of benefits. We [in the Philippines] cost seven pesos. I said you cannot continue like that. That is not government money, that is the money of the people,” Mr. Dominguez said.      “So if it cost me seven bucks to deliver you a hundred…that means to say that seven bucks less I can give to somebody else… Your inefficiency is costing the public money, directly. So I said the first thing you do, you digitize, you do it, you develop a system that you can communicate with your clientele through modern technology, use the cellphone, you know, the smart app,” he added.      “Other countries can do it, why can’t we? You do it through computer and then we can…actually expand the benefits and make it easier for them to get the benefits,” Mr. Dominguez said.      At present, SSS’ online services include online applications for social security number issuance, payment reference number inquiry and generation, employment report submission, submission of contribution and loan collection lists, salary loan applications, certification of salary loan applications and filing for maternity and sickness notification.      Other electronic channels of SSS are My.SSS, SSS Mobile App, Self-Service Express Terminal, Interactive Voice Response System and Text-SSS.      The pension fund said in the same statement that out of 6,609 SSS-related concerns referred by 8888 and the government’s Contact Center ng Bayan, it resolved 99.55% or 6,554 cases.

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